Payroll seems pretty straightforward: you have staff, they work, you pay them what they’re owed.
And yet, there are so many stories in the media about businesses being pulled up for getting it wrong. This year alone, there have been countless reports about hospitality staff being underpaid by their employers:
- Don’t offer staff free lunch: Underpayment claims at Melbourne cafe Barry prompt legal warning for SMEs
- George Calombaris’ restaurants underpaid staff $2.6 million.
- Former cafe manager fined $27,000 for underpayments after court finds he was seeing what he could “get away” with
But it’s not just the hospitality industry. Payroll issues happen in every industry:
- Australian franchise operators warned after swimming school admits to $1.4 million in staff underpayments
- Shark Tank-backed Her Fashion Box to face court over allegations of staff underpayments, unpaid internships
WHY EMPLOYERS GET IT WRONG
As you can see from one of those news stories, some business owners shouldn’t have a business. But most employers simply believe that they haven’t done anything wrong. In fact, they think they’re doing the best they can for their employees.
How do they get it so wrong?
The legislation behind employment and payroll is massively complex, and most business owners don’t have the time to sit down and interpret all the conditions in an employee’s award.
It only takes one error to create a cascading list of payroll problems, including underpayments. And it takes far longer than that to fix.
The hospitality industry has the most challenges when it comes to payroll, because they have some of the most complicated employment needs: employment types, industry awards, penalty rates, and not to mention staff that work outside of normal business hours.
It’s not surprising that so many cafes and restaurants end up with underpayment issues.
Whether intentional or not, the consequences of a payroll mistake can be far-reaching and devastating for your business. You could be subject to an investigation, which could lead to a number of possible outcomes, including paying the money owing, paying a heavy fine, going to court, and even ongoing financial audits to ensure you stay compliant.
Not every business comes back from such a hit.
So instead of crossing your fingers and hoping you’re getting it right, there are ways you can make sure it’s never wrong.
Know your obligations
The best place to go is the FairWork website. It covers everything from hiring to managing to pay and leave.
They have resources and guides and have just launched their Small Business Showcase which has short courses to help you understand your obligations (it says small business but the information is applicable to any size business).
Get bookkeeping software
No more notes on paper.
Put away the spreadsheets.
The easiest and most simple way to make sure your staff are paid correctly (wages, super, tax) is by using bookkeeping software (we like Xero). Set up correctly and you’ll never worry about underpayments again.
Hand it over
What do you do when you don’t know how to do something?
You either spend a lot of time learning how to do it, or you find someone who does it.
Bookkeepers like us are your best friends when it comes to payroll. While you focus on your business, we keep on top of all the rules, legislation and changes around employment and payroll, keeping your business fully compliant.
Hot tip: make sure your bookkeeper is a registered Tax Agent. They’ll have a badge and a number like this:
As an employer, you need to be across your obligations around payroll and employees. Doing it the right way from the start will save you from becoming another news story in the pile. But if you want to really do it properly from the start, get a bookkeeper who’s got your back.